VLT Purse Percentages? Take Your Pick in Ohio

It appears there could be a different number for each of seven racetracks.

It appears rather than having one percentage for the amount of revenue that goes to purses from video lottery terminals, Ohio could have a different number for each of its seven racetracks.

The initial law authorizing racetrack VLTs contained no percentage for purses but said tracks and horsemen must negotiate an amount that would come from the track owners' share. With a state tax of 33.5% on VLT revenue, the bulk of the remaining 66.5% goes to the racetrack gaming facilities.

A casino clean-up law later said the amount to purses from VLT revenue can be no less than 9% and no more than 11%. But despite repeated monthly inquires from the Ohio State Racing Commission about negotiations, tracks and horsemen were unable to strike a deal.

A 2013 statute mandates an agreement be in place within six months of the opening of a VLT parlor. On Jan. 23 industry stakeholders reported they have deals for two racetracks that have been open for gaming since 2012 or 2013.

Dan Reinhard, vice president of legal and governmental affairs for Rock Ohio Gaming, which owns ThistleDown Racino (Thistledown), said track officials and horsemen "have been meeting on almost a daily basis the last several weeks. I'm happy to report I believe we have an agreement."

Reinhard said the primary financial terms haven't changed in recent negotiations, and that Rock Ohio Gaming is waiting for the Ohio Horsemen's Benevolent and Protective Association to sign off on the deal.

Steve McCoy, president of the Ohio Harness Horsemen's Association, told the OSRC the organization and officials at Scioto Downs Racino, which is owned by MTR Gaming Group, are "in agreement on the economic terms." He said the only unresolved issue is stall rent, but that's expected to be resolved.

"If we can work out that language we'll have a totally done deal," McCoy said.

The VLT percentages aren't being releasedjust yet. Some Ohio racing industry stakeholders believe the numbers will become a matter of record when the agreements are submitted to the OSRC, which is a public agency.

It's common policy for state agencies to publicly list the percentages of revenue from casino-style gambling and report where the money goes on a monthly basis. But the Ohio VLT agreements aren't typical of those in most states in that other thingsstall rent, number of stalls in a barn area, even number of racing daysare part of the negotiations on the VLT purse percentage. That has led to questions about whether the agreements, or at least parts of them, are proprietary.

It gets messier. Because there was no firm deadline for all tracks to have a VLT agreement with horsemen, there is reluctance to discuss the figures that have been agreed upon in advance of negotiations at other tracks. This year three more come due: Belterra Park, formerly known as River Downs; Miami Valley Gaming & Raceway, and Northfield Park.

The OSRC, as part of its statutory duty, was prepared to set the VLT percentage for Thistledown and Scioto Downs in January but didn't need to given the progress reports. Still, OSRC chairman Robert Schmitz warned the other tracks it remains a possibility.

"After (VLTs are activated) in a racino, you have six months to reach an agreement with horsemen," Schmitz said. "If that does not happen, the commission will promulgate rules to determine these numbers. There's no need to do that now because the immediate problem has disappeared."

In the absence of agreements, all racetrack gaming facilities have been required to place the minimum of 9% in an OSRC escrow account from which purses have been increased. Scioto Downs has paid the minimum for two years, while Thistledown paid 9% for its entire 2013 racing season.

Given the six-month grace period at the minimum number it's doubtful any racetrack would announce an agreement until the last possible moment.